Tata Consumer spicing up market share game with Organic India buy

Organic India is recognized for its broad selection of herbal and green teas, a significant segment that aligns with Tata Tea Premium, the flagship brand of Tata Consumer. At the 60th AGM of Tata Consumer Products, the Tata Group chairman articulated the company's strategic commitment to comprehensive expansion in both the beverages and food businesses.

Despite contemplating a significant acquisition of the Bisleri drinking water brand from the Ramesh Chauhan group, the deal did not fructify. Concurrently, efforts to acquire Haldirams encountered obstacles. With ITC currently dominating as the largest FMCG company in India, it is imperative for the Tatas to enhance their product range to establish a formidable presence in the competitive FMCG landscape.

The amalgamation of with Tata Consumer Products Ltd and TCPL Beverages and Foods Ltd on 1 January signifies Tata's strategic initiative to bolster its standing in the flourishing FMCG market. Notably, Tata holds a substantial 21% market share in the Indian tea market. Tea stands as a foundational product and a crucial component of Tata Consumer Products Ltd's portfolio, contributing around 32% to the company's total consolidated revenue in FY23.

The market potential for the product categories represented by Organic India, currently generating a turnover of 370 crore, is significant, reaching 7,000 crore in India and 75,000 crore in international markets. Available in over 48 countries, primarily in India and the US, Organic India's product portfolio focuses on sustainable living, including herbal supplements, tea & infusions, and organic packaged foods.

With connections to over 12,000 farmers and comprehensive organic certifications throughout the supply chain, Organic India has pioneered the commercial cultivation of tulsi and introduced high value medicinal crops in India. Featuring a portfolio of over 100 products in the health & wellness sector, this acquisition seamlessly aligns with the Tatas' strategic vision to enhance their presence in the health & wellness category.

Despite witnessing growth in volume, Tata Consumer has experienced a decline in market share over the past three quarters. It is pursuing a dual strategy for growth. Firstly, it concentrates on emerging growth engines like Tata Sampann, NourishCo, Tata Soulfull, and the ready to eat/ready to consume business (Tata Smartfoodz).

Simultaneously, the company is aggressively expanding its distribution network and enhancing digital capabilities throughout the supply chain, positioning itself for the next phase of substantial growth. The Tatas need to leverage their brand name by introducing a broader range of products with depth and width in categories to cater to Indian consumers.

Without expanding their product offerings, the brand's trusted recognition may not be sufficient to secure success. The acquisition of Organic India aligns strategically with the company's objectives. To capitalize on this acquisition, Tata Consumer must demonstrate margin improvement, revive volume growth in the core business of both India food and beverage sectors, implement premiumization initiatives (especially in salt), and achieve robust growth in new products.

Expanding existing distribution channels swiftly, boosting global sales, and diversifying the product lineup are essential steps to maximize the potential of this acquisition. This acquisition isn't just adding products; it's like giving Tata Consumer a jolt of herbal infused energy to spice up their market share game..